Australia needs energy storage and demand management to ensure electricity security

The trend towards greater variable renewable electricity generation is inevitable, and auxiliary services will become increasingly important to making the transition to a secure decentralised future network, says The Warren Centre’s Executive Director Ashley Brinson.

In the past, the National Electricity Market (NEM) relied on abundant, low-cost fossil-fuel resources along Australia’s eastern seaboard. However, global solar PV costs fell 58% in the past decade and are predicted to fall another 60% by 2025, while onshore wind energy is already estimated as the lowest levelised cost generator. Coal is no longer the default technology option for cost-effective electricity generation.

The electricity sector continues to respond to Renewable Energy Targets (RETs), international commitments on emission reductions and changing consumer preferences. Transitioning the energy system to cope with these changes requires urgent action.

Innovation and the Australian electricity market

Rising energy costs coupled with decreasing power reliability and seemingly more frequent system black events accentuates the problem facing Australia. The energy ‘trilemma’ of security, affordability and sustainability undermines our economic development and attractiveness for international investment.

The transition to a grid which effectively manages this trilemma requires the integration of established and nascent technologies. Novel technologies such as smart meters and the Internet of Things provide substantial opportunities to reduce peak demand, but technology must be validated to avoid potentially increased cyber vulnerability and jeopardised grid security.

Other technology trends, such as decentralised residential and commercial site generation, integration of consumer-owned energy storage systems (ESS), electric vehicles, and peer-to-peer energy trading within micro-grids can contribute to greater system reliability.

Forecasting the potential impact of new technologies and changing consumer patterns is essential to maintaining a flexible yet resilient electricity market. To anticipate trends and maximise their potential benefit for the NEM, frequent consultation is needed with the broad community of stakeholders including users, technology suppliers, universities and public research agencies.

Heavy industry requires sure access to energy

To secure productivity of industrial consumers, the operation of the NEM must be safeguarded against susceptibility to extreme systems conditions. The implementation of large scale ESS is essential for industrial power users.

Demand side management (DSM) can incentivise and simplify curtailment of supply to less essential assets whilst safeguarding energy supply for high reliability users such as hospitals and industrial assets.

Implementation of DSM into the modern grid becomes increasingly attractive when considered in conjunction with rising technologies such as smart metering and device interconnectivity through the Internet of Things (IoT). These innovations enable automatic distribution of load and curtailing of specific appliances or services based on digital signals from energy distributors. It will be important for policy makers and regulators to support and possibly lead the investigation and adoption of DSM procedures to coordinate demand management with a whole-of-system perspective.

Securing grid resilience is vital

The establishment and maintenance of a resilient energy network which can effectively address the energy trilemma is a continual process that will likely take many years. However, the vulnerability present in the current NEM could be abated through reforming and modernising the market with proper accounting for new entrants and effective management of ancillary services.

Residential generation, ESS and EVs might be coordinated through networks to support cost-effective generation, transmission and supply back to the grid at periods of peak demand or under supply.

We are unique, but not alone

Though moulded to the Australian context, issues surrounding the integration of renewable generators, evolving market operation, new consumer and operator behaviour patterns, rapid technological advancement and administration of ageing infrastructure have all been managed, with varying degrees of success, by foreign nations in the development of their respective energy sectors.

Germany’s Energiewende programme has experienced many of the difficulties of a renewable-heavy grid, including balancing the vulnerability associated with increased intermittency of generation. Policy adjustments have been implemented to limit market distortion, to manage energy suppliers and to establish a capacity reserve failsafe for adverse system events.

Closer to our shores, China has recently undertaken bold moves to curb emissions while increasing capacity of renewable generation an supporting renewable infrastructure.

Policy leadership and technology creation are both needed

Regulatory reform which is dynamic, concise and transparent enables the best possible market in the near future, while allowing the market to stay effective and efficient in the long term. Optimisation of distributed systems should be continually monitored. Policy stability is needed to bolster investment confidence, but in the foreseeable current period of rapid technology change, a degree of technical adjustment is likely.

This is a summary of the Warren Centre’s response to the National Electricity Market Review. You can read the full paper here.

Image: large-scale commercial battery storage system in Portland, Oregon. By Portland General Electric / CC-BY-ND 2.0